Prices have almost doubled under increases to council fee scales, and fee undercutting is just the beginning
The outlook for architects specialising in small residential projects in 2011 is looking glum as the double whammy of VAT increases and sharp rises in council fees combine to dampen a weak market yet further.
On Friday (3 December), the Daily Telegraph reported that the Local Government Association (LGA) has formally asked for the right to increase charges for a range of services to make up for cuts in central government funding. Margaret Eaton (the association’s chair), said councils needed the extra cash to make up for a £20 billion financial shortfall between now and 2014/15.
The LGA would like to see fees for property searches, building control fees and planning applications increase substantially. In a letter to Communities and Local Government (CLG) secretary Eric Pickles, Eaton, said: ‘Councils should be entitled to levy charges at a level that allows them to recover fully the costs of providing the service, subject to transparency about how fees are derived. Where councils offer a service in a competitive market, the market should determine the fee level, not the government.’
The first of these increases came in October as councils published revised scales of fees for Building Regulation Applications under the Building (Local Authority Charges) Regulations 2010. These new regulations allow local authorities in England and Wales to fix their own charges, based on recovery of their costs, for carrying out their main building control functions.
When the guidance on setting fees was published back in February, CLG made it clear that Local Authorities should continue to make every effort to keep their costs to a minimum, ensure that charges remain affordable and competitive so as not to encourage people to circumvent the regulations. It was also hoped that recognition would be given to good design, as councils were given powers to charge less for Full Plans applications than they do for Building Notices for the first time.
However, rather than concentrating on the ‘competitive markets’ mentioned by Eaton, councils seemed to have hiked fees for householder applications (which make up the bulk of applications) while reducing fees for large commercial applications where there is competition from Approved Inspectors. Councils have also taken the opportunity to extend the categories of work that they charge for, with some now making separate charges for work such as electrical installations or removing a chimney breast. I have even seen one council charge an additional £70 just because a loft conversion includes a dormer window.
Councils stand accused of using the charges as a means to claw back lost revenue creating a hidden tax on householders, penalising the small practices which were expected to create jobs and help spur the economy. Combined with the impending 2.5 per cent VAT increase, I am increasingly concerned that more and more work will be driven into the black economy.
In a cost-conscious market in which architects fees are already under pressure, it will be difficult to explain to clients why they now need to spend an extra 50 per cent to have their plans checked and their work inspected. This already seems to be affecting how much clients will pay for design, as I learnt of an architect last week who lost a domestic extension project requiring Building Regulations plans to someone who was prepared to do them for just £100.
Building control fees vary from council to council and can be downloaded from individual council websites, but here are two examples of the changes:
Example 1 - Loft conversion < 10m2 with a dormer
Borough of Newham’s fee prior to October was £380.70, and has increased by 38 per cent to £524.76. However, if the work is not self-certified by an electrician, they will apply a further charge of £292, which doubles the original fee.
Example 2 – Benefit of using an architect
With VAT currently at 17.5 per cent, Solihull Council are charging £300 for a <10m extension using full plans, £300 if you use a Building Notice and just £306 if you don’t apply in advance and end up regularising. However, when VAT goes up to 20 per cent, regularisation will be less expensive than full plans on a Building Notice as it is not subject to VAT. This means there is no incentive to get pre-approval, never mind use an architect.